Even though Netflix’s first-quarter earnings came in ahead of analyst expectations, CEO Reed Hastings still had to answer plenty of (usually skeptical) questions during this afternoon’s earnings conference call about how he plans to expand the company’s streaming content library.
Hastings has already talked about how the streaming strategy will differ from Netflix’s past, emphasizing a narrower selection of exclusive and original content rather than the more comprehensive selection that the service had with DVDs. He elaborated on that idea today, once again comparing Netflix to cable: “It’s a natural outcome of us been a network like any other cable network.” He says it’s normal for a network to start out with “low-end, nonexclusive content,” then, as it tries to bid for more premium content like Mad Men (Hastings described it as moving up in “the content-buying economic strata”), it’s essentially competing with other cable networks for exclusive syndication rights. You can expect to see that trend continue, Hastings said, but there will always be “a broad range of nonexclusive content.”
As for original content, Hastings said it’s too early for it to make up a big percentage of Netflix watching. So far, the only original show to premiere on the service is Lilyhammer, which Hastings said was “quite successful for the amount we invested in it.” As Netflix launches more high-profile original programming, like House of Cards, you can expect those shows to “build to a nice percentage of our total viewing,” he said.
One of the analysts asked whether Netflix could also improve its selection by creating a tiered pricing plan, where it charged some customers a higher rate in return for access to more content. Hastings said that for now, while streaming video is still in its “growth phase”, it’s important to keep things as simple as possible. Eventually, as the market matures, it might make sense to offer different plans.
“Knock on wood, we’re a long way from that,” Hastings said.